Rousseff to Rule Brazil For More 4 Years


On Sunday, President Dilma Rousseff was re-elected with the smallest margin victory since 1994. She won 54.5 million votes (51.6 percent) as compared to 51 million votes her opponent Aécio Neves received. In her thank you speech, the President made clear that is willing to start a dialogue and bring the country together.

Yet, this task may prove to be very difficult. First, she will have to face the Congress, which has now a stronger PSDB opposition presence. Secondly, she would need to appease the markets, which don’t agree with her policies.  After the elections results were announced, the real fell to a nine-year low against the dollar and the selloff of Brazilian assets has begun bringing the Bovespa down more than 5 percent in the opening minutes of trading.

Only 3.4 million vote difference between candidates proved Brazilians want a change. Yet, adopting more pro-business strategy, stimulating the economy, reducing bureaucracy, waste and corruption may not be feasible any time soon. It is difficult to predict what would be the president next step. Yet, based on the election pledges and recent speech we can expect: 

• Appointment of a new finance minister after dismissal  of Guido Mantega during the campaign;
• Continuation of the social programs like “Bolsa Familia” and “Minha Casa, Minha Vida”;
• Implementation of economic reforms aiming at keeping high level of employment and salaries growth;
• Inflation is expected to come back to the 6.5 percent target in the end of 2014 as the President is well known for her ‘anti-inflation policies’;
• More intervention by the central bank in the foreign exchange markets to protect the currency;
• Strengthen the relationships with Mercosur, Unasur and the Community of Latin America and Caribbean (CELAC) and solider the relations between Brazil and Africa, Asian countries and the Arab world;
• Continuation of the fight for a reform of major international organizations like the UN, the World Bank and the International Monetary Fund.

Rousseff to Rule Brazil For More 4 Years


Carolina Cunha | Carolina.Cunha@tradingeconomics.com
10/27/2014 4:49:17 PM